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i wouldnt worry about a 1929 type crash, we may have a further recession and it may go deeper but hardly 1929.... 1929 was really caused by banks failing with everyones life savings. there was no fdic, no stimulus package , they actually tightened credit in the depression not loosened it, no unemployment insurance and a 25% unemployment rate. our 6% is hardley a fraction of what happened........ every event always has some lunatics claiming the rich people did it or this group or industry did it but usually its not even close to the truth.
wheres all the oil company price fixing we screamed about a few months ago. boy if they are price fixing they have to be the worlds worst price fixers
there was no federal reserve bank system as we know it in those days and although the formation of the federal reserve bank was orchestrated by the fat cats and bordered on illegal the way it was done , credit was running rampant and just like we went thru now was plain out of control and not in the plan to have the great depression just like reganomics was the result of our bad down turns later on but certainly not the idea of going in...... its very easy to monday morning quarterback and draw links and make assumptions about the way any events unfold but they are just stories and while making interesting reading really arent true to what caused certain major events
the events in the you tube video are all true,no question but the assumptions they make about the depression being planned as opposed to just bad bad business decisions ,a market built on nothing,rampant crdet,no fdic,no idea how to handle the money supply in a downturn ,etc i find a bit far fetched... just my opinion........
Last edited by mathjak107; 11-30-2008 at 03:44 AM..
reminds me of many many decades ago when my economics professor was showing us a graph of things people like to do in the great depression and he held up a graph of people going to the movies. it was a huge spike upward in theater attendance just before it started and continued right thru the depression and i said well i guess we can blame the great depression on people going to the movies.. we all laughed but its something i never forgot.
anyone can link ,charts, events or graph something and get very logical looking results and proof but also very wrong
Last edited by mathjak107; 11-30-2008 at 03:47 AM..
the history of the federal reserve is actually a bit of cloak and daggers and trickery.
they are actually a private company ,you wont find them in government listings but you will find them by federal express in the yellow pages. they were the brainchild of the fat cat bankers who realized early on that going back to biblical times the "money changers" who controlled giving you the donation money for getting to pray in exchange for your crops were very wealthy.
they realized if they can control and be the countrys money changers, actually controlling how much interest you pay for mortgages, businesses for loans ,even banks loaning each other they can control an awful lot of money to profit off of.
did you know the federal reserve act giving them control was actually sneakely passed on a christmas eve after most of the legislature went home for christmas ,they kept enough of congress who supported the bill around to get the vote passed while the rest of congress was blindsided.
ethical people i think not, but those you tube links while true are just linking facts afterwards that i dont believe were very true
for amazing insight into what really happened read bernakes works and papers. bernake is the most knowledgable person on the planet about what caused and went wrong that ultimatley led up to the great deppression. his entire life has been spent studying and finding solutions to what would have mittigated the depression..... and this is way before he ever had anything to do with the federal reserve, he was appointed chairman later on for his works
makes sense because americas greatest fear is the great depression,, europe on the other hand has the great inflation before wwII as their greatest fear hense we have opposing priorities generally for our central banks
Last edited by mathjak107; 11-30-2008 at 03:59 AM..
i wouldnt worry about a 1929 type crash, we may have a further recession and it may go deeper but hardly 1929.... 1929 was really caused by banks failing with everyones life savings. there was no fdic, no stimulus package , they actually tightened credit in the depression not loosened it, no unemployment insurance and a 25% unemployment rate. our 6% is hardley a fraction of what happened........ every event always has some lunatics claiming the rich people did it or this group or industry did it but usually its not even close to the truth.
wheres all the oil company price fixing we screamed about a few months ago. boy if they are price fixing they have to be the worlds worst price fixers
there was no federal reserve bank system as we know it in those days and although the formation of the federal reserve bank was orchestrated by the fat cats and bordered on illegal the way it was done , credit was running rampant and just like we went thru now was plain out of control and not in the plan to have the great depression just like reganomics was the result of our bad down turns later on but certainly not the idea of going in...... its very easy to monday morning quarterback and draw links and make assumptions about the way any events unfold but they are just stories and while making interesting reading really arent true to what caused certain major events
the events in the you tube video are all true,no question but the assumptions they make about the depression being planned as opposed to just bad bad business decisions ,a market built on nothing,rampant crdet,no fdic,no idea how to handle the money supply in a downturn ,etc i find a bit far fetched... just my opinion........
We could definitely have a crash.
First let me address the oil issue. The US dollar is a reserve currency. EVERYTHING is priced in dollars. Well not everything but most commodities and that include oil. The dollar is having a faux rally right now. People are demanding more dollars and this in turn is strengthening our currency. This then means it takes less dollars to buy the same amount of a commodity than it did just a few months ago. So now the question is what’s behind this rally and is it permanent? The answer is, deleveraging and no, it’s not permanent. This is how it works. People are settling their debts, to do so; they must pay those debts in, in dollars. So people are demanding dollars to settle these debts, but once that is done then what happens? Well let’s see, they are printing money left and right now and they will print even more to fund Obama's long term plans. His plans are good but it will also lead to inflation. Once that happens, what do you think will happen to commodity prices that are priced in dollars? Well inflation is when you have too many dollars chasing the same amount of commodities. That devalues the currency and that means it takes more dollars to purchase a set amount of goods.
So now let’s move on to could we see a depression in America? Well of course we could. We have a fiat monetary system meaning our dollar has NO intrinsic value. It is worth something because the U.S. govt says it does and others accept that. So how does the monetary base (money supply) grow? Via debt, be that borrowing from abroad via bonds or borrowing from ourselves. So what happens if we have a sudden stop? Where our creditors realize we can NEVER pay back the amount of money we owe and they stop lending to us? Want to know what that looks like? Go see what happened to Argentina.
Let’s look at the F.I.R.E. economy. For those that do not know F.I.R.E stands for Finance, Insurance Real Estate. These are the industries behind our economy. Finance is dying, Insurance (soon to be seen) and Real Estate is done. So what does this mean over all? Let’s put it in perspective and we will use NYC for the example. 20 to 30 percent of employment in NYC is based around Wall Street. Wall Street = the F in F.I.R.E. so that’s a huge blow to that local economy. You think, ok Finance is down but what about retail. Well think about this. I read something on New York Times that said for every 5 dollars generated in NYC 1 of those dollars came from Wall Street. So for example, some broker makes some huge commission. He walks on down to Duane Reed and buys water. He then guys to The Sports Authority and buys a pair of shoes etc. etc. So what happens when that money goes bye bye? Well look at it like this. When you want to start a business you do projections. You look at a given area and you figure how much money a given area has. I say ok, I want to open a computer repair shop in Bed Stuy. I look at the demographics and their purchasing power. I say ok, the people here make x amount of dollars. From ages x to y they have two computers (a laptop and a desktop). These people also have credit cards so then I have to figure out how much credit they have and how much they are going to spend. Well, the credit thing is now gone bye bye. Most people are over extended. Credit lines are drying up, and now so are jobs. So that means these companies who did these projects based on F.I.R.E economy statistics are going to end up closing shop. More jobs shed. Just go to NYT and search for credit card and see what you come up with. The credit card industry is in DEEP trouble. See, that’s the problem with incurring debt, be it for the purpose of growing the money supply or for consumer spending. There will come a point if not kept in check, the debt will outpace the person(s) ability to pay back. For example, you make 30,000 a year. After living expenses you have 200 a month left over (example). This means you can borrow on your credit card up to a point that your payments will be 200 a month. Well what happens when that debt exceeds that? Unless you get a HUGE increase in pay you cannot pay that money back. So then you default. On a side note, some say this is because people wanted to live outside their means. In some cases yes that’s true. In other cases the cost of living out paced people’s ability to keep up with day to day living expenses. That means they then needed to supplement that income and they did so with credit cards and home equity loans. Remember the cost of living has outpaced wages since 1974 or somewhere in there. In 1974 a house was 2 times annual income. Now it’s like 6 times or something like that. Either way the home equity loans are pretty much done for most of America and credit card lines are being decreased and defaults are increasing. It is so bad right now; credit card companies are going to congress to see if they can forgive up to 40% of the debt on peoples credit lines. They are desperate to recoup at least some of the money.
So our problems are a monetary system that doesn’t work and a country that is on the verge of bankruptcy. We can print money to pay our creditors back but then they are getting devalued dollars. The health of the dollar is equal to a terminally ill aids patient right now. People are going to be pulling out of the dollar next year. Eventually the U.S. will have to come up with a new monetary system. Next is fractional reserve banking, which is another absolutely absurd practice. That too will go away or the amount to be kept on reserve will greatly increase. Then you have the fact consumer spending makes up 70% of our economy. If consumers don't spend or can’t spend any long, our economy will tank. People need to really brace for what’s going to happen next year. You should also expect a lot of retail stores to die next year. Black Friday was IT for a lot of stores. If those sales come in low, you can expect a lot of big names to go under. I was shocked to find out Gateway folded a few weeks ago. Called them to have a computer at work serviced and I was told they are bankrupt and to email some address. Email the address and the reply basically said "we are bankrupt thanks for stopping by". So again even MORE jobs shed.
Also figure out how many people in NYC were employed in the Real Estate industry or industries related to Real Estate. Besides brokers, you also have construction workers, architects, engineers, interior designers, then the tax money and money for permits that comes into the city and on and on it goes. You cannot look at economics on just face value. You have to look at the domino effect. If this guy falls, then it will affect x, y and z.
So bottom line. We have a economy that is driven by consumer spending by 70% and a industrial base that is dying (Finance, Insurance and Real Estate). The U.S. also has an overall indebtedness to the point that it can never be paid back. I could name more but the bottom line is, if you think we couldn't see a depression you should go study Argentine in depth and then study our situation. Think about this, a person is a economy on a micro level. What happens when he is in debt and the money he thought he had was really fake (like the funny money on Wall Street). What happens to him? He liquidates what he has to pay off his debts and when that’s all gone he is pretty much ruined/finished. The difference between the great depression and now is, we were not as heavily laden with debt as we are now. Also people saved a lot more back then than now. People savings now are negative. We are in the deepest doo doo we have seen since the Long Depression (Screw the great depression). I don't think a lot of people really grasp what’s about to happen. A lot of people, businesses and cities are not going to make it back from this one.
I should also mention our infrastructure. NYC is one of the best planned cities America has. But when you get away from the big cities in the North East, you get into the suburban sprawls. This is when you really see how vulnerable we are. Sprawl does not work. It is a drain on resources, from water to electricity to fuel. Look at Atlanta they have water shortage issues. It’s because of how sprawled it is. Now if they would have built on the NYC model, it would have been far easier to transport water, less waste. Would have been far easier to plan a mass transit system to move people from A to B because it is easier to move people in large congregations than to move people who are not densely populated and who are all going too far corners of the city. This also ties in to peak oil, which is another issue. Also look at how we farm. Food is coming in from half way across the country to feed people. What happens when petrol goes up again? People won’t be able to afford the stuff. I see urban farming making a huge up swing during this mess.
Anyway, I could go on and on but you get the picture. Obama will transform this economy. Alternative Energy, infrastructure etc and he will help to re work how cities are structured. But that’s going to take a decade or two before we see things put right again. And even when things are made right again it will not be like it was before. People will not be out buying all sorts of crap for their homes. We are going to be a totally different America. Want to know how it’s going to be, go visit Europe. See how their middle class lives. Our day is done. We aren't going to sink into the sea but our lavish, get money life style is over.
P.S.
Also factor in the baby boomers and the amount of money we are going to need to come up with to support these people (social security)
i loooove good financial discussions and i have to admit rarely does anyone have their facts together but i like your style. a little long but i like your style.... realistically though this isnt quite the right forum for a debate of this topic but non the less im giving you points.
First let me address the oil issue. The US dollar is a reserve currency. EVERYTHING is priced in dollars. Well not everything but most commodities and that include oil. The dollar is having a faux rally right now. People are demanding more dollars and this in turn is strengthening our currency. This then means it takes less dollars to buy the same amount of a commodity than it did just a few months ago. So now the question is what’s behind this rally and is it permanent? The answer is, deleveraging and no, it’s not permanent. This is how it works. People are settling their debts, to do so; they must pay those debts in, in dollars. So people are demanding dollars to settle these debts, but once that is done then what happens? Well let’s see, they are printing money left and right now and they will print even more to fund Obama's long term plans. His plans are good but it will also lead to inflation. Once that happens, what do you think will happen to commodity prices that are priced in dollars? Well inflation is when you have too many dollars chasing the same amount of commodities. That devalues the currency and that means it takes more dollars to purchase a set amount of goods.
So now let’s move on to could we see a depression in America? Well of course we could. We have a fiat monetary system meaning our dollar has NO intrinsic value. It is worth something because the U.S. govt says it does and others accept that. So how does the monetary base (money supply) grow? Via debt, be that borrowing from abroad via bonds or borrowing from ourselves. So what happens if we have a sudden stop? Where our creditors realize we can NEVER pay back the amount of money we owe and they stop lending to us? Want to know what that looks like? Go see what happened to Argentina.
Let’s look at the F.I.R.E. economy. For those that do not know F.I.R.E stands for Finance, Insurance Real Estate. These are the industries behind our economy. Finance is dying, Insurance (soon to be seen) and Real Estate is done. So what does this mean over all? Let’s put it in perspective and we will use NYC for the example. 20 to 30 percent of employment in NYC is based around Wall Street. Wall Street = the F in F.I.R.E. so that’s a huge blow to that local economy. You think, ok Finance is down but what about retail. Well think about this. I read something on New York Times that said for every 5 dollars generated in NYC 1 of those dollars came from Wall Street. So for example, some broker makes some huge commission. He walks on down to Duane Reed and buys water. He then guys to The Sports Authority and buys a pair of shoes etc. etc. So what happens when that money goes bye bye? Well look at it like this. When you want to start a business you do projections. You look at a given area and you figure how much money a given area has. I say ok, I want to open a computer repair shop in Bed Stuy. I look at the demographics and their purchasing power. I say ok, the people here make x amount of dollars. From ages x to y they have two computers (a laptop and a desktop). These people also have credit cards so then I have to figure out how much credit they have and how much they are going to spend. Well, the credit thing is now gone bye bye. Most people are over extended. Credit lines are drying up, and now so are jobs. So that means these companies who did these projects based on F.I.R.E economy statistics are going to end up closing shop. More jobs shed. Just go to NYT and search for credit card and see what you come up with. The credit card industry is in DEEP trouble. See, that’s the problem with incurring debt, be it for the purpose of growing the money supply or for consumer spending. There will come a point if not kept in check, the debt will outpace the person(s) ability to pay back. For example, you make 30,000 a year. After living expenses you have 200 a month left over (example). This means you can borrow on your credit card up to a point that your payments will be 200 a month. Well what happens when that debt exceeds that? Unless you get a HUGE increase in pay you cannot pay that money back. So then you default. On a side note, some say this is because people wanted to live outside their means. In some cases yes that’s true. In other cases the cost of living out paced people’s ability to keep up with day to day living expenses. That means they then needed to supplement that income and they did so with credit cards and home equity loans. Remember the cost of living has outpaced wages since 1974 or somewhere in there. In 1974 a house was 2 times annual income. Now it’s like 6 times or something like that. Either way the home equity loans are pretty much done for most of America and credit card lines are being decreased and defaults are increasing. It is so bad right now; credit card companies are going to congress to see if they can forgive up to 40% of the debt on peoples credit lines. They are desperate to recoup at least some of the money.
So our problems are a monetary system that doesn’t work and a country that is on the verge of bankruptcy. We can print money to pay our creditors back but then they are getting devalued dollars. The health of the dollar is equal to a terminally ill aids patient right now. People are going to be pulling out of the dollar next year. Eventually the U.S. will have to come up with a new monetary system. Next is fractional reserve banking, which is another absolutely absurd practice. That too will go away or the amount to be kept on reserve will greatly increase. Then you have the fact consumer spending makes up 70% of our economy. If consumers don't spend or can’t spend any long, our economy will tank. People need to really brace for what’s going to happen next year. You should also expect a lot of retail stores to die next year. Black Friday was IT for a lot of stores. If those sales come in low, you can expect a lot of big names to go under. I was shocked to find out Gateway folded a few weeks ago. Called them to have a computer at work serviced and I was told they are bankrupt and to email some address. Email the address and the reply basically said "we are bankrupt thanks for stopping by". So again even MORE jobs shed.
Also figure out how many people in NYC were employed in the Real Estate industry or industries related to Real Estate. Besides brokers, you also have construction workers, architects, engineers, interior designers, then the tax money and money for permits that comes into the city and on and on it goes. You cannot look at economics on just face value. You have to look at the domino effect. If this guy falls, then it will affect x, y and z.
So bottom line. We have a economy that is driven by consumer spending by 70% and a industrial base that is dying (Finance, Insurance and Real Estate). The U.S. also has an overall indebtedness to the point that it can never be paid back. I could name more but the bottom line is, if you think we couldn't see a depression you should go study Argentine in depth and then study our situation. Think about this, a person is a economy on a micro level. What happens when he is in debt and the money he thought he had was really fake (like the funny money on Wall Street). What happens to him? He liquidates what he has to pay off his debts and when that’s all gone he is pretty much ruined/finished. The difference between the great depression and now is, we were not as heavily laden with debt as we are now. Also people saved a lot more back then than now. People savings now are negative. We are in the deepest doo doo we have seen since the Long Depression (Screw the great depression). I don't think a lot of people really grasp what’s about to happen. A lot of people, businesses and cities are not going to make it back from this one.
I should also mention our infrastructure. NYC is one of the best planned cities America has. But when you get away from the big cities in the North East, you get into the suburban sprawls. This is when you really see how vulnerable we are. Sprawl does not work. It is a drain on resources, from water to electricity to fuel. Look at Atlanta they have water shortage issues. It’s because of how sprawled it is. Now if they would have built on the NYC model, it would have been far easier to transport water, less waste. Would have been far easier to plan a mass transit system to move people from A to B because it is easier to move people in large congregations than to move people who are not densely populated and who are all going too far corners of the city. This also ties in to peak oil, which is another issue. Also look at how we farm. Food is coming in from half way across the country to feed people. What happens when petrol goes up again? People won’t be able to afford the stuff. I see urban farming making a huge up swing during this mess.
Anyway, I could go on and on but you get the picture. Obama will transform this economy. Alternative Energy, infrastructure etc and he will help to re work how cities are structured. But that’s going to take a decade or two before we see things put right again. And even when things are made right again it will not be like it was before. People will not be out buying all sorts of crap for their homes. We are going to be a totally different America. Want to know how it’s going to be, go visit Europe. See how their middle class lives. Our day is done. We aren't going to sink into the sea but our lavish, get money life style is over.
P.S.
Also factor in the baby boomers and the amount of money we are going to need to come up with to support these people (social security)
i loooove good financial discussions and i have to admit rarely does anyone have their facts together but i like your style. a little long but i like your style.... realistically though this isnt quite the right forum for a debate of this topic but non the less im giving you points.
i have a degree in econ. So I understand more than the average joe. That is also why I go long because I know a lot of people don't understand the facts. So i try to explain as much as I can. I used to participate in the business forum but then you get into a circular argument with people who are long on opinions and short on facts. That becomes tiring after awhile. Notices i was spending more time trying to educate those who were in turn giving little back in their debates instead of keeping myself abreast on whats happening.
Now what makes you think a depression is unlikely? Have you ever studied the long depression (not to be confused with the great depression). The elements between the long depression and what we have now are very very similiar.
I should add, i hope and pray I am wrong and that everything I have researched and every economist i adhere to is wrong. I really really do. I hope next year we can all sit back and laugh at me and call me paranoid.
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